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How Prosperous Is the United States?

The results are in! The Legatum Institute has just launched the 2013 Prosperity Index, a broad measurement of national success that looks beyond GDP. Norway tops the rankings (for the fifth year running) followed by Switzerland in second place and Canada in third. The United States ranks outside the top ten, placing 11th overall.

2013 Prosperity Index Top 10

Rank

Norway

1

Switzerland

2

Canada

3

Sweden

4

New Zealand

5

Denmark

6

Australia

7

Finland

8

Netherlands

9

Luxembourg

10

United States

11

Full list of rankings…

So where do these rankings come from? The Index calculates prosperity based on eight core pillars: Economy, Entrepreneurship & Opportunity, Governance, Education, Health, Safety & Security, Personal Freedom, and Social Capital.

The Index takes a broad approach for one simple reason: To view a country's prosperity using purely economic measures is to miss many of the vital elements that contribute to national success. Simply put, wealth alone does not make for a happy and successful society. The outcome of this realization is that what we measure needs to catch up with what we value. Enter the Prosperity Index.

This year, for the first time, the Index has five consecutive years of data covering global events such as the financial crisis, the Arab Spring, and the ongoing civil war in Syria, to name just a few. One way an index like this can be useful is that it allows us to step back from the twists and turns of specific events and chart countries' growth or decay in areas such as economic health, personal freedom, and education.

Covering 142 countries, the Index offers a lot of insight. One of the big picture findings from the 2013 report is that global prosperity is rising. The world is actually becoming more prosperous. Over the last five years, the Index states, "there has been clear progress in Education, Health, and Entrepreneurship & Opportunity. Encouragingly, the Index shows that low-income countries improved faster than high-income countries in these three areas."

So how does the United States compare?

In recent years, America has slipped out of the top 20 rankings within the "Economy" category. This decline is due to a mix of the country's own failings as well as the rapid ascent of many Asian countries that have leapfrogged over the United States in the past five years (as seen in the graph to the left). A similar pattern is also found in Britain. As the Index report states:

"It is striking that both Britain and America have slid down the economy rankings for many of the same reasons: underinvestment, decreasing export competitiveness, and high unemployment. Their decline reflects the fact that economic growth has been largely absent from Europe and North America since 2008."

For those nations that have overtaken the United States and Britain, the outlook is better: unemployment in Taiwan stands at 4.3 percent and at 3.7 percent in South Korea, while it remains above 7 percent in the United States and Britain. Further, China and South Korea have higher levels of high-tech exports than the United States (26 percent compared to 18 percent).

The Prosperity Index also includes citizens' perceptions within its calculations. These also show the United States to be floundering. While only 72 percent of Americans report being satisfied with their standard of living, in Malaysia this number stands at 76 percent and in Thailand it's even higher at 84 percent.

The United States and Britain are not the only losers in the global economic rankings. A host of other European countries have also been leapfrogged by rising economies from the Middle East and Asia.

What do these rankings tell us? Many of those countries that now rank above the United States are still far poorer. However, in many respects (some mentioned above) their economies are in better shape and this may have important ramifications for the future.

In an age where rankings, statistics, and data are the new currency, people are increasingly questioning the traditional economic metrics used to measure national success. In this context, a wider measure of economic health -- and indeed of overall prosperity -- is a valuable tool.

The United States is still the richest country in the world. However, we believe that a nation's prosperity should be defined as much by human freedom, sound democracy, vibrant society, and entrepreneurial opportunity as it is by its wealth. The 2013 edition of the Prosperity Index suggests that the United States has some work to do in some of these important areas.

For more on the United States performance (as well as all other countries in the Index), visit www.prosperity.com.

Nathan Gamester is the Program Director for the Prosperity Index at the Legatum Institute. Stephen Clarke is a Research Assistant at the Legatum Institute.

Krister/AFP/Getty Images

Transitions

Venezuela's Ministry of Happiness

Venezuelans are, by nature, a happy and optimistic people. The country regularly tops happiness rankings, and anyone who has visited the country understands why, as most Venezuelans seem cheerful and upbeat.

Currently, though, Venezuelans are facing numerous problems: a soaring crime rate, faltering public services, a scarcity of basic staples, and increased social tensions. Worried about the effect of this on the country's cheerfulness, the Venezuelan government has taken an extraordinary, and some would say unusual, step: creating a national office for happiness.

According to official press reports, the Vice-Ministry for Supreme Social Happiness of the People (its official name) will serve as an umbrella group for various social programs. Most of them deal with early childhood, culture, race relations, youth, the elderly, and people with disabilities.

The announcement was immediately seized upon by its critics. Sarcastic Twitter users immediately created a hashtag called #SupremaFelicidadEs (which appears in the photo above), using it to complain about everything from not finding toilet paper on store shelves to notoriously sluggish Internet speeds

The idea of public policies geared toward happiness is not completely insane. A few years ago, the Asian nation of Bhutan began calculating a Happiness Index. Ever since then, the topic has gotten more serious consideration: the World Happiness Report, for example, is put out by Columbia University's Earth Institute. As Jeffrey Sachs, one of the report's co-authors, writes:

"A generation of studies by psychologists, economists, pollsters, sociologists, and others has shown that happiness, though indeed a subjective experience, can be objectively measured, assessed, correlated with observable brain functions, and related to the characteristics of an individual and the society. Asking people whether they are happy, or satisfied with their lives, offers important information about the society. It can signal underlying crises or hidden strengths. It can suggest the need for change."

In spite of these lofty ideas, the government's initiative does not entail an original way of looking at the needs of the population. Rather, it is an exercise in bureaucratic reshuffling and re-branding. What the government has done is take a myriad of social programs whose impact is not known, placed them under a single umbrella agency, and given that agency a "happy" name.

The Venezuelan happiness office underscores the importance of bureaucracy to the Bolivarian Revolution. Every major initiative the government has undertaken, from social programs to supporting the oil industry, has meant expanding the role of the state and minimizing civil society involvement. As a result, the government's payroll has gone from 1.3 million in 2002 to 2.4 million in 2012, making it one of the largest in the region. In Venezuela, 20 percent of the work force labors for the state. In neighboring Colombia, the percentage is 3.9 percent.

The creation of this new government body underscores the extent to which the government equates "happiness" with participating in welfare programs. As noted Venezuelan sociologist Colette Capriles points out, the move to put an individual goal (happiness) in a collective bureaucracy "is in line with the totalitarian inclinations of the government, which seeks to invade all aspects of privacy, including the concept of happiness. There is a tendency to transform the individual experience into a collective one, regulated by the State."

Finally, the politics of this move is clearly not advantageous for the government. A government that is supposedly concerned with "happiness" is at odds with the policies most people blame for causing crime and scarcity. The contradiction lends support to the opposition's message that the government is out of touch with the problems of ordinary citizens.

In his landmark novel Nineteen Eighty-Four, George Orwell created government bureaucracies with high-sounding names that completely contradicted their actual functions. As part of his "doublethink," the Ministry of Peace was in charge of war, and the Ministry of Love was tasked with dealing with dissent.

While the Vice-Ministry for Supreme Social Happiness is in its infancy, its sole existence stands as a worthy homage to the great British thinker, perhaps marking one more step in Venezuela's full descent into an Orwellian state.

Juan Nagel is the Venezuela blogger for Transitions, co-editor of Caracas Chronicles, and author of Blogging the Revolution. Read the rest of his posts here.